Team Profile: Three Wisemen Bank

Redondo Beach, November 2007: Three Wisemen Bank was the top-ranked team in the simulation, although interestingly enough they didn't reach their #1 goal. Looking to have the lowest non-performers they where edged-out by Team #4 GoldDigger Bank.

Could they have hit their #1 goal by taking a more consistent provision expense instead of the one (and only!) shot right in the final quarter?

This team was initially the only bank in this simulation to issue capital, $10 Million right at the start. As a result they found they couldn't quite afford to price their loans for stellar credit quality...they needed the higher margin to beef up ROE. The higher than market loan pricing handed them a level of non-performers consistent with Maverick Bank's history. As a result this team minimized their non-performers much like the prior management team...by charging-off loans.

Not surprisingly this team ended with the lowest stock price (mostly because of the additional capital issue). However they did increase their value by initially grabbing a larger share of core non-maturity deposits. Ultimately their lead there didn't last because of margin pressure.

This team was also the most asset liquid of the four, ending with $29 Million in short-term fed funds sold. This balance was as high as $40 million in the sixth quarter. Perhaps they left some money on the table by not investing in securities.

They captured first place on their #2 goal, lowest non-core funding dependence, with their initial growth in core deposits. They also made their #3 goal, highest risk-based capital. This level of capital ended-up being an examiner favorite, making this bank a very safe and sound institution.

While investors didn't love their lower stock price, they made up for it with consistency, having one of the lowest average quarterly fluctuations in price.